Consumer Price Index: Price of goods steadying up
Measures announced by the Central Bank in early March immediately reflected in last month’s Consumer Price Index (CPI) bulletin.
The twelve-monthly inflation rate went down by -2.6 percent during the month of March, but figures for the month show that price of goods is slowly stabilising compared to the previous month. In March 2016, the all items annual inflation rate stood at -3.2 percent compared to -0.6 percent recorded in February of the same year.
Month on month inflation stood at -0.2 percent in March 2016 compared to 0.0 percent in February, representing a slight reduction from one month to the next.
The twelve-monthly average inflation stood at 2.6 percent towards the end of March, whilst the rate for fish, other food and on food items stood at -4.7 percent, 1.9 percent and 2.8 percent respectively.
These figures suggest an overall increase in the price of “Other Food” and “Non-Food” items over the last year, while the price of fish had gone down.
This is according to the Consumer Price Index (CPI) published by the National Bureau of Statistics (NBS) on a monthly basis, from observing price change in about 3,000 items monthly across Mahe, Praslin and La Digue.
The CPI measures the rate of price change of a fixed basket of goods and services purchased by the Seychelles households. It is a tool which measures price changes in goods and services with reference to a base period for which the index is set to equal 100.
Any increase or decrease in this index reflects an increase or decrease in the price of the good or service compared to the price in the base period. Rapid increases in the index imply that the market structure is changing.
The slight decrease in price of goods as observed during the month of March suggests prices are stabilizing after a period during which they were on a hike. This may well have to do with recent measures put in place by the Central Bank to halt inflation in its track after the banks regulator had, in the few months before that, loosened its monetary policies.
It announced in March that it was tightening up fiscal policies in an attempt to mop up a substantial amount of liquidation put in circulation during the months leading up to March. The bank stepped up after inflation had risen to 3.2 percent in March, a few digits away from a ceiling of 5 percent whereby increase in prices is considered alarming.
It was hoped that mopping up the extra liquidation in circulation would balance supply and demand, hence stabilising prices of goods, which appears to be happening.
The rate of inflation measures the rate at which the cost of a fixed basket of goods and services is changing over time. This is usually measured as a ratio of the average index over a twelve month period to the average index of the preceding twelve month period.
Price collection is done during the week of the 15th of every month. Any change in price of commodities that occurs after the price collection week is reflected in the computations of price changes in goods and services with reference to a base period for which the index is set to equal 100.
Any increase or decrease in this index reflects an increase or decrease in the price of the good or service compared to the price in the base period. Rapid increases in the index imply that the market structure is changing.
The slight decrease in price of goods as observed during the month of March suggests prices are stabilizing after a period during which they were on a hike. This may well have to do with recent measures put in place by the Central Bank to halt inflation in its track after the banks regulator had, in the few months before that, loosened its monetary policies.
It announced in March that it was tightening up fiscal policies in an attempt to mop up a substantial amount of liquidation put in circulation during the months leading up to March. The bank stepped up after inflation had risen to 3.2 percent in March, a few digits away from a ceiling of 5 percent whereby increase in prices is considered alarming.
It was hoped that mopping up the extra liquidation in circulation would balance supply and demand, hence stabilising prices of goods, which appears to be happening.
The rate of inflation measures the rate at which the cost of a fixed basket of goods and services is changing over time. This is usually measured as a ratio of the average index over a twelve month period to the average index of the preceding twelve month period.
Price collection is done during the week of the 15th of every month. Any change in price of commodities that occurs after the price collection week is reflected in the computations of the following month, according to the NBS.
Data released by NBS in the March bulletin continues with the changes introduced in January 2015. These changes include revisions made to the weights, the basket of goods and services and a new index reference period.
The index reference period is now 2014 compared to July 2007 in releases prior to January 2015. The weights are taken from the Household Budget Survey of 2013.
Source: Today.sc 4-27-16